In the wake of a significant transfer of shares by the Saudi government, the kingdom’s sovereign wealth fund is poised to reap approximately $5 billion in quarterly dividends from its investment in the state-owned oil behemoth, Aramco. This substantial income stream follows Aramco’s announcement of an increased dividend payout to its shareholders.
The Public Investment Fund (PIF), which is how the sovereign wealth fund is commonly referred to, recently saw its ownership in Saudi Aramco double to 16% after Crown Prince Mohammed bin Salman mandated the transfer of an additional 8% stake into its portfolio. The oil company’s commitment to a dividend total of at least $124 billion for the current year represents a lucrative opportunity for the PIF, which manages an impressive $900 billion in assets.
These dividends are expected to significantly enhance the PIF’s financial capacity as it embarks on ambitious projects within the kingdom. One such venture is Neom, a futuristic city being developed on Saudi Arabia’s western shore, with a project budget exceeding $500 billion. The fund has pledged to channel $40 billion annually into domestic investments to aid in diversifying Saudi Arabia’s oil-centric economy.
However, there has been growing skepticism surrounding the PIF’s ability to sustain funding for such massive initiatives, especially against the backdrop of projected budget deficits that could extend until at least 2026.
To bolster its financial footing, the PIF has already secured $7 billion through two bond offerings this year. Yasir Al Rumayyan, the governor of the PIF, has indicated that the fund’s annual spending is expected to surge to $70 billion starting from 2025, further underlining its role in the economic transformation of Saudi Arabia.